The Central Bank of Nigeria on Monday evening broke its silence on the controversy surrounding the naira redesign policy as it said that the old N200, N500, and N1,000 banknotes remain legal tender till December 31, 2023.
In a press statement signed by its Acting Director of Corporate Communications, Isa AbdulMumin, it stated that it has directed banks that all the old N200, N500, and N1000 banknotes remain legal tender alongside the redesigned banknotes till December 31, 2023, instructing them that they are “to conform accordingly.”
The press statement is coming after President Buhari issued a statement stating that he was not disobeying the supreme court order even though he stopped short of directing the CBN to issue a statement. Nevertheless, it appears the central bank must have seen the president’s statement as a call to action triggering this statement.
However, the statement did not extend to the cash withdrawal limits which have been cited mainly as the reason for the cash shortages and long queues at ATMs. The Supreme Court did not also make any order on the matter of cash shortages as pointed out by Nairametrics in an earlier report.
Cash withdrawal limits remain
The central bank had in December reviewed its policy on cash withdrawal limits, increasing weekly withdrawals for individuals and corporate organizations to N500,000 and N5 million, respectively. It said the move was part of its efforts to drive financial inclusion.
This was after initially N100,000 for individuals.
However, this policy still meant Nigerians faced severe limitations when withdrawing cash from banking halls, and ATMs leaving many Nigerians frustrated and cashless. In addition, securing the new naira notes was also very difficult as banks only allowed limited withdrawals. In most cases, banks will only issue N10,000 cash to their customers seeking withdrawals of their cash.
This means most people had to rely on the online banking system to effect transfer triggering another problem of its own. In time, most leading commercial banks could not meet the surge in demand for transfers on their network infrastructure leading to failed transactions.
Despite these obvious concerns, the matter was not brought forward by state governments who took the federal government to court as they rather focussed on the ban on old naira notes which they felt was more pertinent.
This perhaps explains why the central bank did not address it in this press statement.
Senate asked for an extension
Whilst the Supreme Court and State Governors may have missed this, the Senate did not. Towards the last days of 2022, they urged the Central Bank of Nigeria (CBN) to extend the deadline on old naira notes withdrawal from 31st January to 30th June 2023.
Senator Ali Ndume cited Orders 41 and 51 to seek the leave of the Senate to move a motion on the urgent need to extend the withdrawal of old currency from circulation. Senator Adamu Aliero seconded the motion.
- “The timing needs to be extended to allow every Nigerian to play his/her own role. I support the motion that this withdrawal date is extended to June 30th 2023.” – Senator Aliyu Wammako added.
- The Senate to urged the CBN “ urgently extend the withdrawal date from 31st January to 30th June 2023.”
Whilst the latest statement from the FG and CBN is a welcome development, we wait to see if this is enough to reduce the cash scarcity currently being experienced by Nigerians.
- If it does not succeed in doing so then there will be more pressure on the apex bank to relax the cash withdrawal policy.
- It is also important to note that, most of the old notes have been sucked out of the economy and will also need to be reintroduced into the economy to improve physical cash availability.
- Nairametrics reported that currency outside banks, which represents the total currency in the hands of the public, fell to a record low of N788.92 billion in January 2023 according to data from the Central Bank of Nigeria.
- The apex bank was also able to mop up N1.78 trillion from the hands of the public with its monetary policies, reducing the currency outside the vaults of the banking system from N2.57 trillion recorded as of December 2022 to N788.92 billion.
The CBN will need to inject more of the old or new notes into the economy for the situation to improve.
The courts are not father Christmas. They will not give reliefs not sought. The appellants did not included reliefs on the withdrawal limit. Where it becomes important then the supreme court would be approached. If the banks respect the N500,000 cash withdrawal limit for individuals while using other channels to balance up, I think the average Nigerian should be okay. If not for delayed transfers, Nigerians imbibed alternative channels during the needless currency swap. Domestic issues like market purchases, generator repairs etc were settled by transfer. We can do more but we need to guide against fraudulent and failed transactions.
Banks are not making it easy for customers. In case of failed transactions, they steal from customers by failing to refund the charges component of the transfer. Also, some unscrupulous banks like Access Bank still charges it’s customers for transfers within Access Bank that is supposed to be free. These two issues need to be addressed so we can move in line with CBN expectations